LEARNING BY ASSOCIATION: MICRO CREDIT IN CHIAPAS, MEXICO

Gustavo Barboza and Humberto Barreto ()

Contemporary Economic Policy, 2006, vol. 24, issue 2, 316-331

Abstract: Micro credit programs provide institutional arrangements for low‐income people to transit from nonmarket to market‐oriented settings. This article develops a data set of payment records to determine micro credit participants' behavior on repayment performance. The findings shed new light strongly supporting micro credit as a feasible alternative to successfully provide financial resources to the poor, when controlling for asymmetric information. The empirical evidence indicates that learning by association through peer mentoring is a significant determinant in explaining high repayment rates, whereas peer monitoring is not. (JEL O1, O17, L31, J15)

Date: 2006
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